Tuesday, May 7, 2013

UEFA Prize Money - Rhapsody In Blue

The Europa League has long been regarded by leading clubs as
a poor relation to the far more lucrative Champions League, but Chelsea’s
prodigious efforts after parachuting in to the junior competition might just
give pause for thought, as they will end up earning more from Europe this
season than any other English club.

Although they earned €5 million less than Manchester United
from the Champions League after exiting at the group stage, they will receive
at least €6.5 million from the Europa League, even if they lose the final. If
they repeat last season’s victory in the Champions League, the sum earned will
rise to around €9 million.

This means that Chelsea will receive at least €40.9 million
(Champions League €34.4 million + Europa League €6.5 million), rising to as
much as €43.4 million if they win the Europa League. Of course, the bad news is
that this will still be significantly less than last season’s €59.9 million for
the Champions League triumph - though the blow will be somewhat softened by money from the UEFA Super Cup (€2.2 million) and the FIFA Club World Cup ($4 million).

The other three English Champions League qualifiers should
still be smiling though, as they have all actually earned more money this season,
thanks to a substantial increase in the available prize money (around 22%).

Manchester United’s income rose €4.1 million to €39.3
million, though the difference falls to €2.9 million once the €1.2 million they
received from dropping down to the Europa League in 2011/12 is taken into
consideration. Similarly, Manchester City’s income increased by €5.8 million to
€32.4 million, reducing to €4.6 million after deducting last season’s €1.2
million from the Europa League. Finally, Arsenal will receive €34.5 million,
which is €6.2 million higher than the previous season.

As an aide-mémoire, the money for UEFA’s two tournament is divided
into two parts: (a) prize money based on participation and results; (b) TV
(market) pool.

Prize Money – Champions League

Each of the 32 teams that qualify for the Champions League
group stages is guaranteed a participation base fee of €8.6 million even if it
loses every single game. There is also a performance bonus of €1 million for
each victory in the group stage plus €500,000 for a draw. So if a team manages
to win all six of its group matches, it will get €6 million on top of the base
fee.

If a team qualifies for the first knock-out round (the last
16), it is awarded a further €3.5 million, while there are additional performance
prizes for each further stage reached: quarter-final €3.9 million, semi-final
€4.9 million, final €6.5 million and winners €10.5 million. So if you go all
the way and win the trophy, you would earn a total of €37.4 million (not
counting the TV pool share), which is up from €31.5 million in 2011/12.

Prize Money – Europe League

The principle is the same in the Europa League, though the
sums involved are much smaller. Each of the 48 clubs involved in the group
stages receives a participation base fee of €1.3 million. In addition, there is
€200,000 for each win and €100,000 for each draw in the group stage. A new
addition this season, presumably to encourage clubs to give their all, is qualification
bonuses for teams that progress to the round of 32: group winners earn €400,000
and runners-up €200,000.

Turning to the knock-out stages, clubs competing in the
round of 32 will receive €200,000 each, clubs in the last 16 €350,000, the
quarter-finalists €450,000 and the semi-finalists €1 million. The Europa League
winners will collect €5 million and the runners-up €2.5 million.

That’s now a pretty good incentive, compared to the €3
million paid to Atlético Madrid, the 2011/12 winners. In fact, the winning club
could now receive a maximum of €9.9 million, 54% up from last season’s €6.4
million.

Although the Europa League’s 2012/13 prize money is higher
as a proportion of the Champions League (26% v 20%), the gap between the two is
actually growing (€27.5 million v €25.1 million).

Nevertheless, it can still be a very useful boost to clubs
like Chelsea that drop down from the Champions League, especially if they reach
the final, which is worth either €6.5 million or €9 million (assuming €2
million for the Europea League TV pool, based on previous years). It does
require Stakhanovite efforts on behalf of the playing squad, which may
jeopardise their chances in their domestic league, but, as the figures above
indicate, it can make a big difference.

TV Pool

In addition to these fixed sums, the clubs receive a share
of the television money from the TV (market) pool, which is allocated according
to a number of variables. First, the total amount available in the pool depends
on the size/value of a country’s TV market, so the amount allocated to teams in
England is more than that given to, say, Spain, as English television generates
more revenue. Clubs can also potentially do better if fewer representatives
from their country reach the group stage, as the available money is divided
between fewer clubs.

In the case of the English clubs in the Champions League,
the allocation works as follows:

(a) Half depends on the position that the club finished in
the previous season’s Premier League with the team finishing first receiving
40%, the team finishing second 30%, third 20% and fourth 10%.

(b) Half depends on the progress in the current season’s
Champions League, which is based on the number of games played, starting from
the group stages.

However, the 2012/13 allocation for the element based on the
previous season’s Premier League finish was changed following Chelsea’s
Champions League win as follows: Manchester City (1st) 30%, Manchester United
(2nd) 25%, Arsenal (3rd) 15%, Chelsea (5th) 30%. So, the first three clubs lost
a portion of their TV pool following Chelsea’s remarkable success.

TV Pool – Allocation

The TV pool allocation methodology can produce some results
which seem strange at first glance, e.g. Manchester United and Arsenal were
both eliminated at the last 16 stage, but United received €4.3 million more than
Arsenal (€23.2 million v €18.9 million).

This is entirely due to United finishing one place ahead of
Arsenal in the 2011/12 Premier League, so receiving 25% of that half of the TV
pool (€10.8 million), compared to Arsenal’s 15% (€6.5 million). Of course, both
clubs received exactly the same (€12.4 million) for this season’s Champions
League progress, which incidentally was more than the €9.3 million for Chelsea
and Manchester City, who both went out at the group stage.

Thus, from a purely financial perspective, it is important
not just to qualify for the Champions League, but also to qualify in as high a
position as possible. Fourth place may be considered a trophy these days, but
second or third place are worth even more to the bank balance.

A club’s finances are also boosted if the club finishing
fourth fails to win the qualifier for the group stage, as this would mean that
the TV pool would then be split between only three teams instead of four. In
the same way, it is better financially if the other English clubs do not
progress as far as your team.Note that these calculations assume that the total English TV pool is the same as last season, based on the Sky/ITV deal being more or less the same size, though there are some indications that it might be slightly lower.

However the money is split, there is no doubt that all the
English clubs playing in the Champions League have a considerable monetary
advantage over the rest of the Premier League, as can be seen by the above
analysis of Media revenue from last season – and that was before the 2012/13
increases. As The Clash once sang, it is indeed a “Safe European Home”, at
least for a privileged few.

21 comments:

Worth mentioning that Chelsea also have prize money from the European Supercup (€2.2m) and the FIFA Club World Cup ($4m/€3m) this season as well as revenue from one extra European home game this season compared to last. All this will soften the blow of the drop in income this season.

That's a fair point. Even though the article is primarily aimed at how money is allocated for Champions League and Europa League, that does reduce Chelsea's 2012/13 shortfall. I'll edit that in. Thanks.

It is true that these calculations make the assumption that the English market pool is the same as 2011/12, largely based on the comments reported in the press that the new 3-year deal starting in 2012/13 was "marginally" lower than last time round, e.g. http://www.guardian.co.uk/media/2011/apr/27/itv-sky-sports

Furthermore, when the Press Association calculated likely 2012/13 Champions League revenue after Manchester United's exit, they also used the same €86m figure http://www.independent.co.uk/sport/football/european/manchester-united-count-20m-cost-of-champions-league-exit-to-real-madrid-8522757.html

(Note that the Independent article uses a different split for the allocation based on the Premier League final positions, but I confirmed my figures with a PL spokesman https://twitter.com/PLDan/status/312188912510570496 )

It is also true that United (and indeed Arsenal) have both commented in their interim accounts that there is a reduction in UEFA's market pool for English clubs this season. That said, it looks like any reduction in broadcasting revenue is very small, e.g. Arsenal £0.5m down after 6 months, United £1.4m down after 9 months (though currency will also have an impact).

If I did take €75m as the TV pool (which would represent a more than "marginal" 13% reduction on 2011/12), then Arsenal and City would still have higher revenue than last season, thanks to the higher prize money, while United would be about the same.

In any case, this is good feedback, so I have added a comment in the article to highlight the assumption that the TV pool is unchanged.

Had a doubt.. Is it more lucrative for clubs like say Arsenal to come 3rd in UCL Group stages and winning Europa League, than to qualify from UCL Group stage and get knocked off in Round of 16s from the point of view of earning more revenues?

Good stuff ... it should also be noted that with the 22% increase in CL prize money that Arsenal and ManC got nearly exactly 22% more this past season compared to last season ... so you might say that the increase is almost completely due to the hike in prize money.On the other hand ... ManU should be very disappointed in this year's CL ... even though they earned more, a 22% increase would have put them on 42.9million, that's actually a 3,5million drop if they would have been equal to last year.:) nice way to show something positive that's actually not really so. :)

The Europa league gives a measly financial return for most teams considering the amount of extra games. Here are a few changes that I'd like to see:

1. Stop Champions League teams parachuting into the Europa League. You lost, hard luck! This just seems like a giveaway to the Champions League elite and reduces the chance of the second tier teams of tasting some glory.2. Reduce the number of games. Financial returns don't support beefing up squads. I'd love to see a return to the straight knockout over two legs. Give me back the UEFA Cup!3. Reduce the prize money disparity between the Champions League and the Europa League. If the Europa League had more prize money, it would encourage teams to round out their squad more to support the extra number of games.

With my FM hat on, its amazing to see how this data correlates almost precisely with the in-game finances.

They match about 98% I reckon, in which case you could then use the same in-game knowledge to create even more awesome content on here! Seeing as the numbers in the game should be 98% accurate to real life salaries, staff positions etc.

For teams with a chance of qualifying for the champions league, like Spurs, Everton, Liverpool it may be seen as a distraction without revenue implications on the upside. They tend to feel more ambiguous towards it.

On the other hand, clubs who win a Cup or are losing the final to Champions League qualifiers, like Swansea, Stoke, Wigan etc see it as a once-in-a-while/generation adventure which their fans would like to enjoy. They can greatly increase their profile across Europe by doing well in the competition, making their clubs a more attractive proposition for european talent.

in my opinion, Champions League funding should be frozen at current levels until the Europa League funding is trebled. It has to be a competition which is financially worthwhile for the clubs to compete in. The winners should get as much as teams knocked out at the last 16 stages of the Champions League, whereas semi-finalists should get the same as those knocked out of the Group stages in third place and quarter finalists the same as those finishing last in their Champions League group.

It would make the tournament vibrant and stop this never-ending spiral towards winners-take-all.

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